Punjab drops cessNeed to plug tax leakagesBy withdrawing the cess on diesel and petrol, the Punjab Chief Minister, Capt Amarinder Singh, has corrected a thoughtlessly included provision in the Budget for 2005-06. For this he deserves praise.

A step forward
It will boost gender parity
The Centre’s decision to enact a law to help women work in night shifts was long overdue. It is a progressive step, aimed at removing gender discrimination in employment and making women self-reliant.

Uncalled for strike
Traders should not resist reform
Not quite unexpectedly, traders have decided to go on a long strike in protest against the implementation of VAT.

The American offerIndia should make use of the opportunity
by K. SubrahmanyamThe new US offer to India is not just about F/16 aircraft and nuclear power plants as portrayed in our media. It is about US invitation to India to join its strategy for South Asia in which the US will help to make India a major world power in the 21st century.

Timing crucial for taming a shrew
by Saroop Krishen
A man who had just married was rather short-tempered and had a dictatorial bent of mind. He was as a result quite determined that he would not brook any dissent, or even difference of opinion, from his wife in any matter whatever.

Social audit of privatisation
by B. S. Ghuman
Privatisation policies have been advocated as a panacea for the poor performance of public enterprises. In the initial phase, the philosophy of privatisation was postulated as synonymous to efficiency, quality, more choices, people’s capitalism and boon to state exchequer.

Probe clears Annan in oil-for-food controversy
By Colum Lynch and William Branigin
An investigation into the U.N. oil-for-food program in Iraq has found no evidence that U.N. Secretary General Kofi Annan improperly influenced the awarding of a contract to a Swiss firm that employed his son, but it faulted Annan for an
"inadequate’’ response when the alleged conflict of interest first surfaced.

From PakistanSpeaker gets Mercedes
ISLAMABAD: Members of parliament demanded more privileges in a meeting of the National Assembly Finance Committee held here on Tuesday, sources told The Dawn.

By withdrawing the cess on diesel and petrol, the Punjab Chief Minister, Capt Amarinder Singh, has corrected a thoughtlessly included provision in the Budget for 2005-06. For this he deserves praise. There was no point in making it a prestige issue. The opposition parties had opposed the cess, which was the only levy proposed in the Budget. The Captain has also reduced the value added tax (VAT) rate on diesel from 12.5 per cent to the existing tax level of 8.8 per cent, but petrol will attract VAT at 12.5 per cent from April 1. That is fair enough.

Though it is not binding on the states to follow Central policies, they can very well learn from these. National policies are formulated after intensive brainstorming by think tanks and these indicate the direction the country is taking. The states can shape their policies accordingly, keeping in mind local priorities. Since the recent Central Budget had reduced the excise and Customs duties on oil, it makes little sense in raising the taxes on petroleum products at the state level. The Prime Minister and the Finance Minister have very aptly handled the crisis arising from the spiralling global oil prices in the past one year and contained the impact on the consumer prices.

The cess, of course, would have raised some Rs 100 crore to finance the proposed Agri Diversification, Infrastructure, Research and Development Fund. The Finace Minister will have to make good the shortfall. The Chief Minister has hinted that the Finance Minister can announce fresh taxes while wrapping up the discussion on the Budget. Unproductive and undesirable expenditure on luxurious living and social ceremonies can be targeted. Huge shopping complexes and malls are fast coming up in the state and their promoters should not mind paying a little extra. Few will object to any fresh levy on liquor. The proposed tax relief to the sponsors of cricket matches can be withdrawn. However, instead of leving too harsh fresh taxes, it is important to cut wasteful government expenditure and plug the leakages in the existing tax collection system. VAT should also lead to higher revenue.

The Centre’s decision to enact a law to help women work in night shifts was long overdue. It is a progressive step, aimed at removing gender discrimination in employment and making women self-reliant. The government intends to ratify the International Labour Organisation Protocol (1990), as also amend Section 66 of the Factories Act (1948), to achieve the intended purpose. The decision as such does not come as a surprise. A Bill was introduced in Parliament in this regard in July 2003. However, following opposition from the unions, it was referred to a parliamentary standing committee for greater scrutiny. Presently, the law does not allow employment of women between 7 p.m. and 6 a.m. The amendment to the Factories Act will remove this hurdle in the statute.

Over the years, several women’s organisations have been demanding equal employment opportunities for women in all sectors of the economy. The Second National Commission on Labour strongly recommended that gender bias in archaic labour laws would have to go to provide a level playing field for women. More important, the Madras High Court, the Andhra Pradesh High Court and the Bombay High Court had struck down as null and void the provisions of the Factories Act restricting women from working in night shifts. The Government’s decision was thus long overdue. In addition to IT, manufacturing and electronics industry, a major beneficiary of the decision will be the textile sector, which employs over a million women workers.

Significantly, the government has made it clear that the employers will have to provide foolproof safeguards for women working in night shifts in terms of their safety and health, equal opportunity, and transport facilities. The state governments will be empowered to enforce these conditions. Women continue to play a marginal and peripheral role in growth. No country can sustain its development if it keeps women, nearly half of the population, out of work. The talk of women’s empowerment becomes empty rhetoric if women are confined to the kitchen and not allowed to contribute to nation building.

Not quite unexpectedly, traders have decided to go on a long strike in protest against the implementation of VAT. Their apprehensions are either because of lack of information or because of their resistance to change for what benefits the consumer and not the traders themselves. In the process they have made the value added tax to be a devil it perhaps is not. Scare stories are being spread all around that consumers will have to pay more once the new regime comes into being. That is diversionary tactics at best. After all, since when have traders become such active protectors of consumer rights? The agitation has more to do with the desire to ensure that they continue to make more money at the cost of the consumer. A close study of the VAT provisions makes it quite clear that it will do no harm to honest traders in any way. Yes, those profiting from tax evasion will be inconvenienced by it. Prices of some items may rise but the reverse may also be true in other cases. The whole system has to be judged in totality.

Traders’ cause has been helped by states which have not implemented the system because of political reasons. Since VAT was piloted by the BJP initially, it was expected that VAT would be kept above narrow political controversies, but that was not to be. This is despite the fact that small traders have been taken out of its net and the Centre has promised to compensate the states 100 per cent in the first year, 75 per cent in the second and 50 per cent in the third year of implementation for any loss that they may suffer from the changeover.

Since a majority of the states are implementing it, the rest will have to fall in place sooner or later. Those who hold out may lose the competitive edge. Having such “islands” may cause many complications but that does not mean that the enforcement has to be postponed till every state says “aye”. This is an idea whose time has come and the sooner it is put in place the better. In fact, VAT should have come into force last April itself.

The American offerIndia should make use of the opportunity
by K. Subrahmanyam

The new US offer to India is not just about F/16 aircraft and nuclear power plants as portrayed in our media. It is about US invitation to India to join its strategy for South Asia in which the US will help to make India a major world power in the 21st century.

One can draw a parallel between this offer made by US Secretary of State Condoleezza Rice to Dr Manmohan Singh on March 15, 2005, to the secret journey of Dr Kissinger to Beijing in July 1971. At that time the US asked China to join the US strategy to contain the Soviet Union and in return promised help to make China a major world power.

Thanks to US help in terms of investments, transfer of technology, market access in the US and the linkage between US multinationals and Chinese PLA- run industrial ventures, China has registered phenomenal growth and is now on the way to becoming the second economy of the world. There are long-range US predictions that at this rate of growth China will catch up with the US in aggregate GDP in the next two to three decades and then would attempt to outstrip the US in science and technology.

In the 20th century the military might was the foremost currency of power in the game of nations. In the 21st century, with rapid globalisation, there is growing realisation that the power ranking of nations in international hierarchy will depend on their knowledge accumulation and R&D capabilities rather than military might.

Vietnam, Afghanistan and Iraq all demonstrate, unlike up to the end of World War II, it is no longer possible to occupy territories against the will of the people even though armed forces could be defeated in wars. This development robs the Clauswitzian maxim of war being an extension of politics of all meaning.

The cold war was fought and won without a shot being exchanged between the US and the USSR. The US won the war on the basis of its superior economy and technology and the strength of its democracy.

In the world order that will develop over the next three to four decades it is anticipated that China may overtake the US as the foremost economy with matching R&D skills.

The US understandably is loath to shed its status as the foremost power and is looking for a strategy to prevent China from overtaking it. In the next three or four decades population all over the developed world and China would have aged. It is predicted that in all these countries the working- age population would be smaller than the non-working population.

The fertility rate is falling in developed countries. China adopted one-child policy with the result that some of these developments will take place there earlier than in other countries. India’s population will be younger and this country will have a higher percentage of working to non-working population.

While generally, countries have to depend upon their knowledge pool based on the domestic availability of skills, the US has the advantage of importing knowledge from outside through immigration. The Indian population in the US has demonstrated how much it could contribute to US wealth and science and technology. Therefore, it is natural for the US to plan a strategy which would help it in terms of Indian brains even while making India a major world power.

India’s English language, democracy, multiculturalism, total absence of clash of national interests after it became a nuclear missile power and country’s strategic location, next to China, Central Asia and West Asia, make it a most attractive partner for US in this 21st century game of nations.

Unfortunately, people living in the past still think of military alliances and military confrontation with China. They talk of concepts of territorial imperialism, capitalist exploitation and the like which have become totally obsolete. They overlook the fact that China’s economic growth was wholly due to its partnership with the US. Germany, Italy, France and Britain owed their resurgence as world powers. After World War II destruction entirely due to US help. So did Japan. The US did not do it out of charity but in its own national interest to contain communism and bring about the crumbling of the Soviet Union due to the pressures of containment.

It is now accepted that in the 21st century the economic centre of gravity of the globe will shift from Europe and North America to Asia and from the Atlantic to the Pacific. Out of the six major power centres in the world — the US, the European Union, Japan, China, Russia and India — five, all except the European Union will compete for power and influence in Asia. Therefore, India becomes very important to the US. The US proposal must be understood and decided on in this broad strategic framework and not as lollipops to India to balance the US offer of F-16s to Pakistan. In this larger game of nations Pakistan is not a crucial determinant.

India itself used Soviet help in industry and technology during 1954-1990 and US help in terms of PL-480 foodgrains upto 1974 to build itself up very modestly when international capital was not readily available to be tapped for our development, partly because of our own mistaken policies in the post-1970 period. When China opted to collaborate with the US and grew at 8-10 per cent. India missed the opportunity.

Prime Minister Manmohan Singh has talked of international climate never being more conducive to India’s growth than at present and the need to tap international finance for India’s development. The US has a large influence on the foreign direct capital investment. Without US goodwill China would not have obtained foreign capital investment on the scale it has received.

The US offer of strategic partnership is a unique opportunity. The government should enter into consultations with the opposition parties and UPA allies to evolve a consensual support to this proposal. The External Affairs Minister and the Prime Minister must accept the invitation extended to them and try to develop a more comprehensive understanding of the US strategy in the 21st century.

A man who had just married was rather short-tempered and had a dictatorial bent of mind. He was as a result quite determined that he would not brook any dissent, or even difference of opinion, from his wife in any matter whatever.

He was driving the horse carriage in which he and the wife were seated when the horse happened to stumble. Upon this he shouted, “One”. The horse stumbled again a little later and the man said loudly, “Two”. After a while the poor horse was unlucky enough to stumble once more. The driver became very angry and saying “Three” took out his gun, and shot the horse dead.

On this the wife lost her temper and screamed, “You cruel man, what on earth have you done? Why have you shot a perfectly good animal for a very small fault?” The husband looked at her calmly and pointing his gun towards her said, “One!” That made the wife shrink back petrified and she did not dare to say even a word more.

A friend of the husband’s, whose second name was “hen-pecked”, had endless trouble with his wife lording over him constantly, heard of this happening and thought the same line of action might work for him also. When one night a cat jumped on to his bed he took up his sword and angrily cut off the cat’s head in order to strike terror into his wife’s heart.

Her reaction, however, was rather different. Being a hardened husband-baiter with years of practice behind her, she flew into a rage and caught her husband by the throat. “You miserable beast!” she cried, “What harm did the poor cat do to you that you decided to kill her? You should really be ashamed of yourself. I have half a mind to call the police and have you sent behind the bars for this gross cruelty”.

It became quite clear to the crestfallen husband that his idea of following the example of his friend in the horse-carriage had no future in it.

This story is based on a Persian saying, which is a model of brevity, and runs: “Gurba kushtan roz-i-avval” (The killing of the cat has to be the first day).

“About marriage different ideas prevail in different countries. In England, for instance, in certain social circles it is almost a ritual for a marriage to be announced in The Times in its “Births, Marriages and Deaths” column — known jocularly as the “Hatches, Matches and Dispatches” column.

In fact, it can even be said that a marriage is not regarded as complete without such an announcement. And, of course, the laws about licences for civil marriage are nothing short of hilarious — witness the problems faced by Prince Charles and Camilla Parker Bowles. If the marriage is performed in Windsor Castle any member of the public becomes entitled to have his or her civil marriage performed there. If the venue is the Guild Hall there is no privacy left, as the place becomes open to the public as a matter of right.

And the latest legal opinion is that royalty cannot have a civil marriage at all. There is in any event no precedent for it — apparently it did not occur to any Prince of the earlier times to provide one for the benefit of Charles — and without a precedent nothing can work in that country. So we get back firmly to square one! (In fact a newspaper report is that the question of the legality of the marriage is likely to be referred to the court and whatever the decision there the case will be taken to the High Court in appeal. If that happens the time factor will, of course, put paid to any idea of April nuptials).

Tailpiece: A distraught gentleman published this notice in the “Lost and Found” column of The Times: “I lost near Kensington station” wallet containing the only photograph of my dear departed wife of 50 years, a currency note of £ 100 and a few odds and ends. Will the finder please return to me the note for which I have great sentimental value?”

Privatisation policies have been advocated as a panacea for the poor performance of public enterprises. In the initial phase, the philosophy of privatisation was postulated as synonymous to efficiency, quality, more choices, people’s capitalism and boon to state exchequer.

As privatisation progressed both extensively and intensively its negative outcomes also started surfacing, which started a debate on the need and sustainability of privatisation. In certain cases privatisation has reached its limits. An appropriate example is the privatised rail service in the U.K.

The companies that took over railways in the U.K. did not invest sufficient funds on safety networks, the results of which were series of rail accidents. In the U.K. 70 to 80 per cent of the general public favours renationalisation of the railways.

In the U.S. cities are fighting for de-privatisation of water supply. Their major complaints against privatised firms are a hike in charges, low pressure, deterioration in quality, endangered public safety and lack of infrastructure upgradation.

Re-nationalisation of banks and telecom services has been under consideration in a couple of countries. Above all the sponsors of the privatisation programme — the World Bank and the IMF — have also started rethinking about privatisation, particularly in the transition economies such as Russia, Mongolia, Ukraine, Armenia, Georgia, Kazakhstan, the Krgyz Republic and Moldova.

Privatisation is under attack not only on the basis of economic considerations, the negative social implications of privatisation are equally pronounced. In this write-up a social audit of privatisation is undertaken by examining the likely impact of privatisation on employment, poverty, women, backward areas, social services, agriculture, and socially backward classes.

Employment generation was one of the major objectives of public enterprises. Privatisation, it is feared will result in layoff. In a layoff unskilled, semi-skilled and casual workers suffer the most and fail to find jobs quickly in the private corporate sector due to job stagnation and preference of capital intensive technology the corporate houses.

In contrast, the skilled and managerial cadre employees would not face much dislocation hardships as they are in demand in the private sector. The overall changing composition of the employment structure disfavouring unskilled and semi-skilled workers, non-existence of job security cushion, demand for flexible labour laws and a hostile environment within privatised firms would result in workers’ alienation, particularly in the absence of a social security network.

Liberalisation and privatisation hit the poor due to a hike in prices, withdrawal of services after privatisation from economically unviable but socially desirable areas (e.g. withdrawal of passenger transport from uneconomic routes), cuts in subsidies for the poor, introduction of user charges in social sectors like health and education, and official apathy towards poverty alleviation.

A gender audit of privatisation suggests that privatisation in India will not be in the interest of female workforce. When privatised firms reduce manpower and wages the axe falls mainly on women. Most women are on contract or ad hoc basis and are engaged in activities, which after privatisation are either contracted out or manual operations are replaced by machine operations. Women-friendly concessions such as pregnancy leave, crèches and preparatory schools are withdrawn or provided on the cost-effective principle.

To mitigate regional disparities, public enterprises made huge investment in backward states. In the post-privatisation era market forces guide fresh investment. Investment prefers to go to states like Maharashtra, Tamil Nadu, Gujarat, Karnataka and Andhra Pradesh having locational advantages and well-developed infrastructure. Industrially backward states like Bihar and border states like Punjab fail to get adequate investment. Thus, liberalisation and privatisation are likely to increase regional disparities, resulting in many social problems, including social tension and secessionist movements.

Public enterprises are effective instruments for promoting the interests of socially disadvantageous classes and castes. On an average, 27 per cent of the employees of public enterprises, at present, are from the Scheduled Castes and the Scheduled Tribes. After privatisation, the benefits accruing to such groups will gradually disappear.

In the beginning it was advocated that a sizeable chunk of resources raised by privatisation would be invested in the social sector. Reality is contrary to this policy rhetoric. During the post-economic reforms period, public funds as a percentage of the national income in the social sector have not increased.

Paradoxically, due to user charges and privatisation of the education and health services, the disadvantaged groups have suffered the most.

Agriculture, the backbone of the Indian economy, has suffered heavily during the post-reform phase. Both public and private investment in agriculture has declined. The share of investment in agriculture as a percentage of the GDP was 1.6 per cent in 1993-94. It declined to 1.3 per cent in 2001-02.The declining flow of funds to the agriculture sector has resulted in the deceleration of growth. This has increased rural indebtness, farmers’ suicides, rural student dropouts and social unrest in rural India.

Privatisation seems an irreversible process and hence a strategy should be devised for making it people-friendly. Five types of policy initiatives can be helpful in this regard.

First, privatisation should cover only those sectors which produce private goods. The sectors providing public and merit goods should be exempted.

Secondly, all existing social and economic benefits for employees, socially backward classes and backward areas should be continued. Thirdly, by learning from the German experience, employment and investment guarantee clauses should be made an integral part of a privatisation deal. In East Germany firms under an agreement not only protected existing employment but also pumped more investment.

Fourthly, as in the U.K., the government in each agreement of privatisation should keep the clause of “Golden Share”, which empowers the government to reverse the process of privatisation in case the privatised firm does not follow the agreement.

Fifthly, on the patterns of the National Renewal Fund, a social-cum-economic hardships fund should be set up. The purpose of this fund should be to meet deficiency of funds in social sectors like education and health and also economic sectors like agriculture, which have been facing financial hardships on account of privatisation.

—
The writer is a Professor in the Department of Public Administration, Panjab University, Chandigarh.

Probe clears Annan in oil-for-food controversy
By Colum Lynch and William Branigin

An investigation into the U.N. oil-for-food program in Iraq has found no evidence that U.N. Secretary General Kofi Annan improperly influenced the awarding of a contract to a Swiss firm that employed his son, but it faulted Annan for an
"inadequate’’ response when the alleged conflict of interest first surfaced.

After a nearly year-long inquiry, a report released Tuesday by an independent panel criticized Annan’s son, Kojo Annan, and the company that employed him, Cotecna Inspections S.A., as well as senior U.N. officials. But the panel, the Independent Inquiry Committee headed by former Federal Reserve chairman Paul A. Volcker, generally absolved Kofi Annan of involvement in the alleged improprieties that swirled around the oil-for-food program before the March 2003 U.S. invasion that toppled Iraqi President Saddam Hussein.

The secretary general welcomed the report. “As I had always hoped and firmly believed, the inquiry has cleared me of any wrongdoing,” he said in a statement.

The oil for food program began in late 1996 as a way to provide humanitarian relief to the people of Iraq, which was under U.N. trade sanctions because of Hussein’s 1990 invasion of Kuwait. In 1998, Cotecna bid on a contract to authenticate freight shipments arriving in Iraq under the program and began work in February 1999 after winning the contract. At the time, Kojo Annan was an employee of Cotecna.

“The evidence is not reasonably sufficient to show that the secretary general knew in 1998 that Cotecna was bidding on the humanitarian inspection contract,” the Inquiry Committee’s report said. It said there was “no evidence” that the awarding of the contract to Cotecna “was subject to any affirmative or improper influence of the secretary general in the bidding or selection process.”

But it pointed out that Cotecna’s chief executive, Robert Massey, was indicted in June 1998 by a Swiss magistrate in connection with an investigation into alleged illicit payments by Cotecna to former Pakistan prime minister Benazir Bhutto. The committee’s report suggested that this should have been taken into consideration by the United Nations when it awarded Cotecna the contract in the first place.

Regarding Kojo Annan, the report noted that allegations began to appear publicly in the press in early 1999 that the awarding of the U.N. contract to Cotecna might be linked to the company’s employment of the secretary general’s son. The committee found the son duplicitous with both the investigating panel and with his father.

“Kojo Annan actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him,” the report said. “He also intentionally deceived the secretary general about this continuing financial relationship.”

Kojo Annan, now 31, originally joined Cotecna as a trainee in Geneva when he was 22, before his father became U.N. secretary general, Kofi Annan has said. But there was apparent deception about how long the son continued to receive payments from the company. Last November, a U.N. spokesman acknowledged that the younger Annan received payments for more than four years beyond the date that the world body had previously said they had stopped. The monthly payments had not stopped at the end of 1999 but had continued through February 2004, U.N. spokesman Fred Eckhard said.

The committee’s report said it still has “significant questions” about Kojo Annan’s actions in the fall of 1998, “as well as the integrity of his business and financial dealings with respect to the oil-for-food program.” It said the committee’s investigation into these matters “is continuing.”

During the oil-for-food program’s years of operation, it collected more than $64 billion from the sale of Iraqi oil and spent nearly $43 billion on humanitarian activities in Iraq, according to the United Nations. An additional $ 18 billion went to compensation payments for the Iraqi invasion of Kuwait.

ISLAMABAD: Members of parliament demanded more privileges in a meeting of the National Assembly Finance Committee held here on Tuesday, sources told The Dawn.

The committee also approved the import of over Rs11 million Mercedes car for Speaker Chaudhry Amir Hussain. There was a mild opposition by some of the members. Interestingly, the meeting was presided over by the Speaker himself.

— The Dawn

Law on money
laundering

ISLAMABAD: Prime Minister Shaukat Aziz on Tuesday said an anti-money laundering law was ready and would be presented to parliament for approval to have an effective check on the menace in the country.

Inaugurating an international seminar on “Anti-Money Laundering” organised by the State Bank of Pakistan here at a local hotel, the Prime Minister said that with financial sector reforms in the last five years, the country’s economy had improved.

— The News

PPP may come
to ‘power’ soon

LAHORE: PPP leader Asif Ali Zardari on Tuesday said after coming to power which, he said, was not too far, the PPP would lift the ban on all trade unions and restore the rights of labourers.

In his telephonic address from Dubai to the participants of the People’s Labour Conference organized by the People’s Labour Bureau at the Lahore Press Club, he said no dictator would dare usurp the rights of labourers, who had the power to bring about a revolution.

— The Nation

A project on
Indus dolphins

Karachi: The World Wide Fund for Nature (WWF) Pakistan, with technical assistance from the HEJ Research Institute of Chemistry (HEJRIC) and on-site assistance of the Sindh Environment Protection Agency and the Sindh Wildlife Department, has launched a three-year project for the conservation of the Indus River dolphin, which is an endangered specie found only in the Indus.

God loves us with a tender love. That is all that Jesus came to teach us: the tender love of God.

— Mother Teresa

Remember always that you not only have the right to be an individual, you have an obligation to be one.

— Eleanor Roosevelt

It is because of His will that some are blessed by His divine grace and some are doomed forever. The latter are born again and again.

—Guru Nanak

The wise seek to control their emotions and passions. They control their bodies, control their tongues, control their minds. Leaving sins behind, they practice virtues with their bodies, tongues and minds.